State, city spar over who picks up the convention tab

Less than six months before Boston hosts the 2004 Democratic National Convention, the stage is set for a standoff over how much state and city taxpayers should have to chip in.

Convention organizers do not like to talk about it, but a gap of approximately $10 million looms large on their balance sheet -- money that will almost certainly have to be made up through some combination of city and state dollars. Sharp differences of opinion have emerged between state and city leaders as to who should pick up the lion's share of those costs.

The battle pits a Democratic mayor and a Republican governor who view the convention in starkly different ways and who have different mixes of political ambition, pride, and fiscal prudence on the line.

Mayor Thomas M. Menino worked hard to bring the convention to Boston. As a lifelong Democrat, he sees it as a central part of his mayoral legacy. But he is also locked in tense negotiations with more than 30 city unions that are now without contracts, and that are ready to blast the mayor for using city funds on a political event. Menino has long said that he would prefer not to commit city cash to the event and that he wants the state to make up any gap.

Governor Mitt Romney has come out strongly against any "political welfare" that would have state tax dollars supporting a four-day party celebration. The convention is coming to Boston as Romney tries to make a name for himself in national GOP circles, and he does not want to roll over to the Democrats on any issue. Yet Romney is only two years removed from his leadership of the Salt Lake Winter Olympics, where he looked to federal taxpayers to make ends meet.

"It's an interesting political situation," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed fiscal watchdog group. "There's some truth to both of their cases. But in the end, there'll have to be some compromise to pay for the convention."

Romney has been vocal and firm in his beliefs, starting even before he was inaugurated as governor in January 2003.

Menino has been equally blunt: Since the state will see added sales tax revenue from the convention, the state budget should be a major source of extra cash and services the convention needs, he has said.

But neither wants to be accused of skimping on security costs at the first political convention since the Sept. 11, 2001, terrorist attacks.

Political observers say either could afford to pay; $10 million is a small sum in the $23 billion state budget or the city's $1.75 billion budget.

It is far less than local and state governments have paid for recent conventions. In 2000, the Republicans' convention in Philadelphia cost the local and state government about $42 million, and the taxpayer bill was $36 million in Los Angeles for the Democrats, according to a study by the Campaign Finance Institute at George Washington University.

In Boston, the money has taken outsized importance in the symbolism of politics. The full political situation is more complicated than either Romney or Menino lets on publicly.

"The fact is that it is a major-party political convention, and you have a Republican with national political ambitions and a Democratic mayor on the hook for a good show," said Lou DiNatale, director of the Center for State and Local Policy at the University of Massachusetts at Boston.

Romney has been wary of feuding publicly with the mayor of the state's largest city, and his aides declined to comment for this article. But in a December interview with the Globe, Romney said that while numerous hints have been suggested that the state help pay for the convention, he is adamantly opposed to seeing tax dollars support a political event.

"I have made it, I think, very clear from the very beginning that the state taxpayers should not finance a convention -- Republican, Democratic, or private sector," the governor said. "The convention should stand on its own. It should raise the money it needs to be held."

Romney also drew a distinction between his Olympic leadership in 2002 and the money that DNC organizers are seeking now. He pointed out that Olympic security in Salt Lake City was financed by the federal government and private sponsors.

For the Democratic convention, the federal government has agreed to provide $25 million to Boston to cover security costs, a proposition he lobbied for, Romney said. "I encouraged that funding," he said.

Menino sees the issue in the context of a long-running dispute he and previous mayors have had with Beacon Hill over the state's tax structure. While Boston is an economic engine for the state, most of the economic activity the city generates does not make its way to the city directly. Rather, the sales tax, the income tax, and the meals tax all are directed to state government coffers, which supports Boston and other cities and towns with annual local aid payments.

The mayor saw his argument work its way down Boylston Street to City Hall Plaza the week after the Super Bowl. The New England Patriots' victory parade cost about $465,000 to put on, with the city picking up 44 percent of the costs, and the private sector financing the rest. According to city figures, the parade made $22 million to $31 million in retail sales, souvenirs, food and drink, and transit -- an amount that city officials say tranlates into at least $500,000 in state tax revenues.

Menino argues that's why the state should pick up a major share of convention financing. Organizers are predicting the convention will bring $150 million in economic impact, though they have not estimated how much extra cash will make its way to the state in the form of tax revenue.

"It's a question of fairness," Menino said in an interview. "That was a one-day event. Can you imagine what six days of 35,000 people will do for growth dollars to the state?"

For their part, convention organizers are trying to stay out of a Romney-Menino fight and say they're planning to put on the convention without state or city tax money, though they declined to say how. Convention officials privately acknowledge that they will need more of a public-sector commitment to cover security costs -- like state and local police overtime -- as well as some logistical and transportation expenses.

Rising security costs, in addition to a history of last-minute overruns at past conventions, suggest that state and city taxpayers will have to produce about $10 million, according to analyses of convention financing conducted by independent specialists.

"For any public official to say they've got the cost covered is probably an exaggeration," said Peter Sepp, a spokesman for the National Taxpayers Union, a Washington, D.C.-area nonpartisan watchdog group that has studied the public costs of political conventions. "Costs get snuck in under the wire, because they get lost in all the hoopla."

The political equation appears to favor Romney -- not least because Boston is one of the parties that signed the convention contract with the Democratic National Committee, said DiNatale.

"The likelihood that Romney is going to bail him out is close to zero, and there's probably no downside for Romney," he said. "Menino's going to have to raise that money on his own."